Deltek shores up public sector market research with FedSources acquisition

The two chief competitors in public sector market research are no longer fighting for each others' customers: INPUT's parent company, Deltek Inc., on Friday announced a $26 million acquisition of rival business intelligence firm FedSources.

Deltek, a global enterprise software provider based in Herndon, Va., bought McLean, Va.-based Washington Management Group, which includes FedSources and FedSources Consulting, through an all-cash transaction.

FedSources, a 25-year-old company with estimated revenue of $15 million for fiscal 2011, is regarded as the authority on advice and predictions for upcoming government work in the defense and intelligence communities. INPUT's strengths lie in information technology market predictions, as well as state and local government outlooks. Last fall, Deltek purchased INPUT for $60 million.

The new venture "is going to be able to give the marketplace two choices and it's not going to be one monolithic enterprise," said Ray Bjorklund, chief knowledge officer at FedSources. "Since INPUT and FedSources will be working together, now we can put our resources into helping the customers rather than beating each other."

The combined venture does not intend to dissect every business opportunity for aspiring contractors, he said. Rather, each side will tap into the existing assets of the other arm to supplement areas where each has been weak, Bjorklund said. For instance, FedSources might branch out into architecture and engineering by using Deltek's programs to offer software that can help customers manage architecture and engineering contracts "in a way that's going to give them a little bit of a leg up," he said.

On a personal level, Bjorklund said he expected to devote more time to developing research methodologies, and spend less time attending events and visiting customers. Just this past week, for example, he said he went on a sales call to win a customer from INPUT. And since the two companies periodically have held overlapping conferences, some of those events might be canceled.

Many of the logistical details of the integration have yet to be worked out, Bjorklund said. As for layoffs, "In any acquisition there may be some down the road, but we don't know," he said.

By buying FedSources, Deltek secured the McLean company's 900 clients and 20,000 users, adding to the more than 14,000 organizations and 1.8 million users the company currently services. Deltek officials said they expect to continue supporting FedSources products and services for current FedSources customers.

The combination of INPUT's business opportunity database and FedSources' contract research and agency spending breakdowns is expected to create the biggest repository of U.S. contract intelligence -- representing opportunities valued at more than $500 billion annually.

"This acquisition extends our capabilities as the premier end-to-end government contracting solutions partner, providing an unmatched suite of solutions from business development and capture management to comprehensive financial and project management," Kevin Parker, Deltek president and chief executive officer said in a statement. "Our integration process is under way, and we expect to benefit from many future synergies as we leverage this acquisition to be a growth catalyst for Deltek."

Bill Gormley, president and chief executive officer of Washington Management Group and FedSources added, "The government domain expertise of WMG and FSI, together with the global reach and industry-standard software solutions from Deltek, provides contractors with one strategic partner that delivers a full life cycle of success to companies that want to enter and win in the government marketplace."

Correction: This story originally misstated FedSources' estimated revenue for 2011. It has been corrected.